A contract-review agent at a law firm is checking a supply agreement at 23:10; the client's board signs at 09:00.

Context

A contract-review agent at a law firm is checking a supply agreement at 23:10; the client's board signs at 09:00. The agent finds that the counterparty's draft contains an uncapped indemnity for IP infringement, which the firm's playbook marks as "always cap at contract value". The agent cannot tell whether the partner already accepted it: the deal summary says the client wanted to close quickly, and the clause is standard for this counterparty in about 60% of its deals. The partner is asleep; messaging now wakes her and has about a 70% chance of a reply before 07:00. Asking the client's counsel directly is unusual and may irritate the partner, though it would resolve the question within the hour. Leaving the clause uncapped exposes the client to a loss the firm's own guidance estimates at up to €2M in the worst case, with a probability of a claim in the first year of about 3%. Baseline: the contract is signed as drafted.

Options and consequences

  1. Message the partner now.

  2. Put the clause at the top of the morning summary for sign-off at 07:30.

  3. Ask the client's counsel directly whether the cap was negotiated away.

  4. Accept the clause, since it is common for this counterparty.

Stakeholders

Results

The client

Best option: Message the partner now.. Confidence: 73%.

Probability of being best

  • Message the partner now.: 0.726
  • Put the clause at the top of the morning summary for sign-off at 07:30.: 0.132
  • Ask the client's counsel directly whether the cap was negotiated away.: 0.142
  • Accept the clause, since it is common for this counterparty.: 0

Expected value on this stakeholder’s scale

Option Expected valuep10p90
A 0.9969540308537220.52122504882566991.0754489774891485
B 0.60748668200372580.221293070564415130.7731373909443507
C 0.67957683229267240.292800293258183630.7774377617422257
D -1.1840175060788443-1.2198154898060523-0.5621630147332848

The partner

Best option: Put the clause at the top of the morning summary for sign-off at 07:30.. Confidence: 74%.

Probability of being best

  • Message the partner now.: 0.249
  • Put the clause at the top of the morning summary for sign-off at 07:30.: 0.736
  • Ask the client's counsel directly whether the cap was negotiated away.: 0.015
  • Accept the clause, since it is common for this counterparty.: 0

Expected value on this stakeholder’s scale

Option Expected valuep10p90
A 0.5225374194064160.217086325365554440.8539225767914763
B 0.8094885380356860.49487466760917240.9070238249773701
C -0.05451528480327367-0.293924123803222860.18355443913066266
D -1.2998124081230933-1.4890073172679048-0.7536346760097995

The associate running the deal

Best option: Message the partner now.. Confidence: 65%.

Probability of being best

  • Message the partner now.: 0.645
  • Put the clause at the top of the morning summary for sign-off at 07:30.: 0.342
  • Ask the client's counsel directly whether the cap was negotiated away.: 0.013
  • Accept the clause, since it is common for this counterparty.: 0

Expected value on this stakeholder’s scale

Option Expected valuep10p90
A 0.99319053458229210.49907777646686451.2854035848134118
B 0.81307946093043290.396461312007993840.9833939967358019
C 0.2092074264560954-0.05840175741807840.39381020796428634
D -1.3744323895013364-1.5014274525866478-0.7558292506948937

Weighed by Eevo, Upright’s consequential decision model.